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Cooperative R&D with Differentiated Products in Vertically Related Industries

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  • Gamal Atallah

    (Department of Economics, University of Ottawa, Ottawa, ON)

  • Parisa Pourkarimi

    (Department of Economics, Carleton University)

Abstract

This paper studies the impact of cooperative R&D on innovation, welfare, and profitability in vertically related industries where products are differentiated. The model incorporates two vertically related industries, with horizontal spillovers within each industry and vertical spillovers between the two industries. Upstream firms produce a homogeneous intermediate good, while downstream firms provide differentiated products. Three types of R&D cooperation are studied: no cooperation, horizontal cooperation, and vertical cooperation. The comparison of cooperation settings in terms of R&D and of profitability shows that although vertical cooperation yields higher innovation and welfare, it may lead firms to over–invest in R&D.

Suggested Citation

  • Gamal Atallah & Parisa Pourkarimi, 2020. "Cooperative R&D with Differentiated Products in Vertically Related Industries," Working Papers 2007E Classification-L13,, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:2007e
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    File URL: http://hdl.handle.net/10393/41582
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    References listed on IDEAS

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    More about this item

    Keywords

    Vertical spillovers; Horizontal spillovers; Product differentiation; R&D Cooperation.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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